Controversy over monetisation of games isn't going away, and it's likely to reach the corridors of government sooner rather than later

Last year was a fantastic 12 months for videogames - as in, the actual creative products of this industry, not the shorthand for the industry itself. Studio after studio launched major titles that matched or exceeded the greatest of expectations; Nintendo's 2017 was particularly remarkable, but barely any of the big titles of the year really missed their mark. So good was the year in software terms that some very good games got rather buried - Arkane's superb reboot of Prey being perhaps the game that suffered the most unfortunate gap between its superb quality and the lack of attention it garnered. Many of you, I'm sure, ended the year with a dramatically sized Pile of Shame you're hoping to diminish before 2018's releases start pouring in.

It was not, however, a particularly fantastic 12 months for the videogames business. In theory, this should be a making-hay kind of period for the industry. The tough parts of the transition to digital distribution are behind us, a couple of very strong console launches have proven the resilience of traditional game platforms, and new innovations like VR or AR are interesting to explore, but many years away from being disruptive to existing business. Yet rather than sitting back and letting this be a fantastic era in which to grow the audience, explore creatively and get balance sheets on an even keel, most of the industry finds itself still locked in transition crisis mode - except this time it's a business transition, an unseemly haste to change the fundamental models of how game creators and publishers transact with customers.

"Is it impossible to make a AAA game with the production values of Battlefront 2 without a gacha-esque loot crate system? Perhaps, perhaps not"

The result of this, viewed in hindsight over 2017, often looked like the business was just stumbling from one self-made crisis to the next. The big and memorable screw-ups, like Star Wars Battlefront 2's loot boxes, were punctuated by little ones. From the consumer side, a trickle building to a steady flow of awful stories about people with plainly addictive personalities putting themselves or their families in dire financial straits thanks to the uncapped spending potential of these modern business models. From the industry side, feet hurtled with pin-point accuracy towards mouths as executives tried (and often failed) to balance their messaging to both consumers and investors, whose desires have never been more diametrically opposed.

To hear people from within the PC and console games industry talk about this, you'd imagine the whole thing to be a fait accompli. We've moved past DLC and season passes now; loot boxes and in-game currency and all the trappings of smartphone free-to-play are now part and parcel of what AAA games are, and we'd all just best get used to it. Over on the smartphone side, things are even more clear-cut; without F2P, most people will tell you, there is no smartphone game market.

The reasons given for why this state of affairs must be accepted are well-worn by this stage; AAA games can't make enough money to justify development costs without finding new ways to monetise their core players. Mobile gamers won't pay for games so F2P is the only way to make money at all. Even developers and creators who aren't entirely sold on these systems tend to mournfully acknowledge their necessity, while pointing out - entirely fairly - that it's possible to implement these things well, and fairly, and even in ways that make games more fun. It's just that the biggest budget and most high profile examples tend to make a bee-line for the most exploitative models possible, that's all.

"Within the next couple of years, a government or regulator somewhere will crack down on the industry's shiny new business models"

Each of these assertions of necessity or inevitability is pretty much untestable. Is it impossible to make a AAA game with the production values of Battlefront 2 without a pretty exploitative gacha-esque loot crate system? Perhaps, perhaps not - though honestly, I feel like the controversy over the business model rather let EA off the hook for how utterly uninspired and vapid the game itself is, once you get past the expensively created scenery. Plenty of other developers seemed to make superb, involving games in 2017 that didn't have microtransactions or loot boxes and still made money, but something like the Star Wars license is undoubtedly costly. Equally, is it impossible to make money on mobile without F2P? Perhaps so, but a lot of the assumptions around that - like the importance of "whales" who spend big - are untested and generally backed up only with rather hoary anecdotes.

The problem, as I see it, is that large segments of the industry have repeated these assertions to themselves so often that they now really do see this transition as being inevitable and necessary - and that has blinded them to the very real potential of these business models, or some of their more exploitative aspects, being banned or shut down. I have lost count of how many discussions I had in 2017 where the prospect of regulation being imposed was greeted with dismissal. It might have been airily ("oh, but we need these things, so they can't stop us doing it"), or angrily ("but if they do that, people like me will lose our jobs / companies like mine won't be able to keep going"), but in either case that kind of dismissal amounted to a refusal to engage intellectually with what is almost certainly going to be one of the industry's biggest challenges in 2018 or 2019.

It will not be universal, of course, and it's hard to say where it'll start - but within the next couple of years, a government or regulator somewhere is going to choose to crack down on the industry's shiny new business models. If I were a betting man I'd say either the EU or China is the most likely place for it to happen, and that mobile F2P is still most firmly in the crosshairs; there are simply too many issues around whales, too many tabloid-ready stories of families ending up deep in debt to someone's smartphone game addiction, and too much potential for children to be involved for this not to be on regulators' radars. Console and PC games can also provoke outcry though, and the whole question of loot box items being re-sold on RMT marketplaces raises a spectre of unlicensed gambling as well.

"The sudden imposition of more wide-reaching regulation really would be catastrophic for a pretty large number of companies"

When a government somewhere becomes convinced that these business models and approaches are abusive, damaging and socially harmful, claims that these models are necessary to profit from games, or that their regulation might result in the loss of jobs in the industry, are highly unlikely to be considered substantial mitigating factors. (One can only hope the industry will have the sense not to even try trotting out the smarmy teenage libertarian 'hey adults are free to spend their money as they wish, even if it's their kids' college fund going into gacha tokens for a mobile game' argument.)

Regulation is by no means always a bad thing for an industry - it's often necessary and actually helpful to growth - but when applied to something as poorly-understood by regulators as videogames, it's likely to be an overbearing response to a set of worst case scenarios. The industry will be judged by its most abusive and exploitative games, and sentenced accordingly.

The hope would be that whatever regulation is eventually handed down - and on our current trajectory, I am certain that this is a question of when, not if - will really only blunt the edges of the worst offenders, perhaps by putting a strict per-user revenue cap in place, or banning specific mechanisms (as Japan threatened to do with the combu-gacha systems in games a couple of years ago). The sudden imposition of more wide-reaching regulation really would be catastrophic for a pretty large number of companies, and really would result in significant job losses - not significant enough for legislators to weight them above consumer protection, I suspect, but a major blow to the industry nonetheless.

Perhaps the optimistic view is also worth considering; that stripped of the capacity to endlessly pursue whales down increasingly narrow paths, much of the industry would be forced to return to the task our biggest publishers seemingly abandoned half a decade or more ago - actually growing the audience for games, building revenues by selling to more and more people rather than by extracting the maximum number of dollars from a stagnant or even dwindling player base.

Even mobile F2P, the stunning growth of which promised to open up new frontiers for games, has trapped itself against a ceiling; its biggest games have barely swapped chart positions in years, and largely simply churn the same player base amongst themselves. The regulation of the industry's business models that is almost certainly coming in the next few years will be a shock, and it will hurt, but it might deliver a more sustainable industry in the long run. Smart businesses should start thinking beyond our current monetisation obsession now; those who find other ways to grow the audience will be best placed to survive when this bubble gets a pin stuck in it.

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I agree 100%. Regulation is inevitable. The industry seems unlikely to handle it well (See, for example, the ESA's statement regarding the WHO classifying a "gaming disorder" in its mental health order against common sense and objective research; it may be against objective research, but I struggle to see that it is against common sense.)

My biggest fear is that in refusing to admit that we have an issue, we force government's hand, and they over-regulate, stifling the industry both creatively and commercially. My current prediction is that we will be foolish, they will over-regulate and we will all suffer the consequences (including the consumers who will hail this, wrongly, as a great victory for video games).

Studio after studio launched major titles that matched or exceeded the greatest of expectations; Nintendo's 2017 was particularly remarkable, but barely any of the big titles of the year really missed their mark.

Interestingly enough, Nintendo succeeded without microtransactions or loot boxes, while EA suffered a pretty big black eye by putting microtransactions in a $60 game - to the point where they were forced to pull microtransactions out of the game completely.

Over on the smartphone side, things are even more clear-cut; without F2P, most people will tell you, there is no smartphone game market.

Sure, they will tell you that. But then again, I'm rather enjoying Monument Valley, Monument Valley 2, Botanicula, Human Resource Machine, and The Witness.

So - I'm gonna agree to disagree with those people. I don't think the smart phone game market wouldn't exist, it would just be a different form. A form I might actually like better.

Perhaps the optimistic view is also worth considering; that stripped of the capacity to endlessly pursue whales down increasingly narrow paths, much of the industry would be forced to return to the task our biggest publishers seemingly abandoned half a decade or more ago - actually growing the audience for games, building revenues by selling to more and more people rather than by extracting the maximum number of dollars from a stagnant or even dwindling player base.

Nailed it.

I'm not a big fan of government regulation, but I do think that the gaming business does need to take a step back from milking customers for every last penny, and take a good look at how to make games enjoyable again.

You know, like Zelda: Breath of the Wild, or Super Mario Odyssey. Does anybody really question the success of these games?

Nintendo went from a bleak outlook (to the point where nobody really thought they could recover) to unquestionable success with a couple of superbly strong games. Why isn't everybody else paying attention to that?

The vast majority of people just aren't willing to pay for their game time on smartphones, no matter the price. They've been trained for so long that games are simply free. They don't even really see themselves as gamers.

It's like being offered free hamburgers for years, why would you suddenly want to pay for one with extra cheese? Players rarely see value in the myriad of intentionally confusing propositions offered to them, most of the time rightly so.

The real issue is not how to reach more audience but how to better convert the one already in place, by offering better propositions or purchase models and better gaming value for their dollar.

I wouldn't be surprised to see a rise in affordable subscription models. They have a tendency of being well perceived by consumers and offer a great value. Unlike that loot box with 0.8% chance of getting that missing legendary item to complete your legendary set.

Politicians talk about protecting minors and are met with arguments about profits being in danger and job loss looming. Which basically equates to an admission of guilt on the accusation of exploiting minors. How can you get yourself in a worse position? Human sacrifice during a congressional hearing? Offering jobs to people and wanting to make a profit is not a free pass to do anything you want. This line of argumentation has to stop.

The next thing which is going to get shut down hard is the trading card argument. At the end of the day, if you spend $5 on trading cards, you have $5 in trading cards and you can do with them as you please. We all know that if you spend $5 on a loot box, you own nothing, the transaction not only takes away your money, it annihilates the value. If you want to trade the cards from the real world card pack for a single trading card worth $5, then that will work, since the value of your $5 were not deleted when you made the transaction from money to cards. Card companies are not fine with a $5 pack containing 25cents worth of cards, they know that makes them look bad. Compare that to destroying virtual cards for a fraction of their crafting cost to accumulate trading credits.

Age verification will come, but the result will be that publishers will even lean harder into monetizing the 18-25 demographic. You know, the one where psychological studies show their frontal lobe decision making is just as impaired as before, yet the law gives them no protection from abuse; that demographic.

The elephant in the room is that more than legislative entities, platform holders will have to take steps to stop the current scorched earth approach of publishers. We may laugh about the anecdotal story of the GameStop employee advising against Battlefront. Have your game do that to yourself and you get mocked a bit. Have your game do that to Sony and Nintendo and you can start hardware development on your own console. "That's the console with the abusive microtransactions" is not something which should ever be allowed to enter the mainstream conversation. As long as Twitch chat cheers, it does matter how many boos are in the room during an E3 conference. Vice versa, no amount of canned cheers makes up for an angry chat.

The amount of anti-f2p in the gaming media is frankly unbelievable. Explain to me what about Battlefront's loot boxes was abusive? Optional paid extra that you can get through playing the game seem like a trivial addition to me.

You try to throw in that there's a smarmy libertarian defence that is somehow invalid, nice pre-emptive strawman there. The fact is that people are free to make their own decisions. In what world is any consumer good or service limited in terms of the amount a consumer can spend besides their actual credit limit? It seems like you're happy to welcome a world in which people think the government should be acting like a parent giving out pocket money and deciding when we've had enough.

With the introduction of 'gaming disorder', which seems to have little to no evidence behind it, you can bet that after tackling monetization the state will set its sights on arbitrary content and play-time restrictions.

Who is saying that protecting minors will lead to job losses? People are probably saying that banning something for everyone because you want to protect children will hurt jobs, as would be the case with alcohol, cigarettes, cars or pretty much any sensibly restricted good or service.

Just because something is digital doesn't mean it has no value! Being able to sell or trade a trading card isn't a given, what if no one will purchase it or accept a trade, then you're just left with some pointless, valueless card.

Also, explain to me what is abusive about Battlefront's loot boxes. You can earn all of them and more by playing the game; the very thing that is the main point in getting the game. The grind seems no worse than the last Battlefront, in fact, it looks like you can get all the Heroes in about 24 hours of play - https://www.pcgamesn.com/star-wars-battlefront-ii/star-wars-battlefront-2-microtransactions-cost
Even if they were scaled back to a quarter that's only about 100 hours, hardly a big deal in the world of online games!

Even mobile F2P, the stunning growth of which promised to open up new frontiers for games

They did open up new frontiers, unlike console and PC mobile opened the world of games to billions of players that weren't being served, and a much more diverse audience at that. Legislation that hurts these companies will have one big effect - it will push away a more diverse audience.

I argue why do things have to be unlocked? Why do I have to spend $60 and 100h to have access to everything? Especially when there is an instant offer to pay money to make the 100h go away. It sends the message that these 100h only exist as a hidden price hike. Pay in money, or with your time, but pay you will. Granted, some games do have a progression that is fun. Do these games sacrifice their progression in exchange for more money? No, they know their progression is fun and that fun is the capital of the game. Yes, it is technically the same thing called progression, but it is used in two very different ways. That is an important distinction to make here.

A look back to the early PlayStation games makes this even more visible. Games such as Ridge Racer were structured around instant wish fulfillment. Buy game, step on the gas of a fast car, done. More recent racing games are structured around the idea of hard work. A game is little more than an entry ticket to a world of hard work. You no longer pay $60 for the shiny sports car on the front, you pay $60 for the privilege of working hard to some day maybe drive this car. Across all their games, EA created this insane situation where it is more efficient to get a real job and spend the money from that job on microtransactions, than it is to spend time in the game to unlock stuff. So the moral of an EA game is to not play games because they offer less rewards than real life? Maybe we should legislate every game to have more loot boxes then, teach those kids a life lesson. Forget 'winners don't use drugs', 2018 is the year of 'Work the street if you want to compete(TM)'

Developers do their best to intertwine this forced progression for the sake of microtransaction with a peasant rags to riches plotline, but let's not fool ourselves as to the reasons why things exist in the way they do.

Quick online trading card FAQ:
(1) Whom can you sell your cards to? Answer: nobody.
(2) With whom can I trade them? Answer: one person who rips you off harder than anybody ever got ripped off in a trading card shop.
(3) Do you own these 'cards' then? Answer: not really.
(4) What happens if you gift all of them to anther player? Answer: your account gets closed, because transferring it to another player is against the EULA.

Sure, nobody wants my set of WWF trading cards from the 90ies either, but at least I own them in a way I will never own a Hearthstone 'card'.

@Klaus Preisinger: Things have to be unlocked because that's what the developers chose to implement and it's their work. If you don't like it then don't play those games.

Also, very few videogames have no gates or restrictions to progression. Whether or not someone finds that fun is entirely on the individual as it's subjective. How do you know that they don't sacrifice progression for money? As though there's some non-arbitrary scale for it, maybe they extend progression to be able to pad out the length of the game and get higher review scores. How many AAA games with progression as a core part of the experience run as long as say, Candy Crush Saga?

If you view a game as hard work then it's probably not for you, if you don't find that fun then don't play those games. These progressions systems only exist because that's what the majority of players seem to want. There's still plenty of quick to access games like Mario Kartalthough even on the Wii U you had to go through to unlock all the cars - that's just how games tend to function.

It might be more efficient to buy your way to the end game but you don't have to do that. If people want to pay to skip the time commitment that's their choice. We shouldn't legislate them to include or not include certain systems, we should give them the creative freedom to make the games they want and let the market decide if they want to buy them.

Yes, you don't own a card you use it while you play the game, that's the deal. Again, if you don't want that, don't buy into it.

If people want to pay to skip the time commitment that's their choice.

Except that it is no choice at all. Instead it has become a sales opportunity. A choice is when I go into the setup menu of the game to decide on the parameters of my game, e.g Sim City with infinite money. Choice is not when a game tells me that it costs thousands of Dollars or thousands of hours in addition to the sticker price while I am wondering whether I am having fun with the options granted to me from the getgo. That is a hustle.

These progressions systems only exist because that's what the majority of players seem to want.

I argue, the players want fun and only tolerate the progression systems as long as they are fun. There is no intrinsic desire to be subjugated to progression systems before fun can happen. How messed up would that be? To that end a well designed progression is the enemy of microtransactions. Why would I speed up the progression, if it is fun to play?

Traditionally, paid games could serve two types of players, those who want to play a progression and those who want to skip it in favor of playing with everything unlocked, e.g by typing IDFA. What we have seen in the past decade is the emergence of a third type of player who is willing to pay for having the unlocks. Catering to this third type of player has created issues with the other two types. In essence, players were stripped of their choice because there is now a way to enforce one way of playing a game and commoditise choices that would have been included by default previously. This coincided with the rise of games which removed Doom's peashooter run to grab a better weapon in favor of spawning the player with a loadout. It also gave games a chance to reward loyalty with more powerful loadouts. Players sure as hell did not get any better, but tweaked damage values and autoaiming behavior sure covered it up. Once concept can be sold, the other cannot, guess which one gets implemented these days where loyalty is an item in a microtransaction store.

We have seen the same thing happen to visual progression, where games abandon the concept of giving players much of an inherent visual character progression in favor of microtransactions. This had the advantage of there being a gameplay puritan movement to rely on when it comes to players evangelizing each other about the unimportance of those microtransactions, all while the revenue of developers was proving the exact opposite to be true. But nobody ever asked themselves, if a game was more fun if Vader was pink. They did however ask themselves, if the game was more fun, had they access to Vader to begin with. This is when things went downhill with no hope of recovery for Battlefront, because that is a question that will not die out with the old generation of gamers. You cannot be trained to not think that question. 30 million sales of Battlegrounds have proven one thing above all, the formula of player vs. player found in Battlefront is dead as disco; outdated retroware; the pixel graphic of gameplay. The rest is pitch perfect, but presentation alone is not enough. Zelda did not get laughed out of Horizon's room. They went head to head, because the market has moved beyond pure visual fidelity.

The only person who really must have progression, is the one using it to make additional microtransaction sales. Turning timegating into moneygating is not as smart as it sounds. Between having working models of how addiction works in conjunction with minors and having those models available to people willing to implement them into games, regulation is not an option, it is a necessity.

@Klaus Preisinger: If you don't think that you have a choice in these then I can't see us agreeing.

Lots of games have progression because people enjoy them. There's lots of great f2p games like Dota 2 and Warframe. Also, if you don't want those games you can play the old ones. With regards to Battlefront yes, if it's outdated then it won't sell and games like Battlegrounds will. That's my point - players will determine where the market goes.

Each time I read about sustainable Game models, I always think of Warframe; that game that no publisher wanted and that was pointed as "unprofitable" and that managed to get 25 million players and goes by its 5th year running.
In the industry we have always complained about how close-minded other markets (and the media) are towards us, we need to be careful not to become close minded about ourselves too.

Historically speaking, FiFa has always been this way and the lootbox/progression mode was an addition to the traditional game mode choices which have no progression.

Battlefront comes from the Battlefield branch, which made the switch to a progression system in 2005. This pure gameplay progression was since abandoned in favor of a new progression blended with loot boxes.

Imo, EA should get it over with and add an everything unlocked mode FiFa style, while keeping the other. Splitting one progression into two, numerical and visual, seems moot. Considering that Disney is the master of adding new dresses to movies in order to sell more toys, the choice of throwing them under the bus with pink Vader was pure toxicity.